Anemonefish are protandrous sequential hermaphrodites, meaning they develop into males first, and when they mature, they become females. If the female anemonefish is removed from the group, such as by death, one of the largest and most dominant males becomes a female. The remaining males move up a rank in the hierarchy. Clownfish live in a hierarchy, like hyenas, except smaller and based on size not gender, and order of joining/birth.

Anemonefish lay eggs on any flat surface close to their host anemones. In the wild, anemonefish spawn around the time of the full moon. Depending on the species, they can lay hundreds or thousands of eggs.

It is aggressively territorial and is completely dependent on its sea anemone. They live in small groups on outer reef slopes or in sheltered lagoons at a maximal depth of 15 meters. It inhabits three different species of sea anemones: Heteractis magnifica, Stichodactyla gigantea and Stichodactyla mertensii and have symbiotic relationships with the anemone.